College for ALL Act presented by Senator Bernie Sanders on May 19 2015

WASHINGTON, May 19 – Sen. Bernie Sanders (I-Vt.) today introduced legislation to make 4-year public colleges and universities tuition free.

“We live in a highly competitive global economy. If our economy is to be strong, we need the best educated work force in the world. That will not happen if every year hundreds of thousands of bright young people cannot afford to go to college and if millions more leave school deeply in debt,” Sanders said.

Under the legislation, $70 billion a year in assistance – two-thirds from the federal government and one-third from states – would replace what public colleges and universities now charge in tuition and fees. The federal share of the cost would be offset by imposing a tax on Wall Street transactions by investment houses, hedge funds and other speculators.

The legislation also would overhaul student loan programs so students and their parents could reduce crushing debt loads which now exceed Americans’ credit card debt. Federal profits on loans would be eliminated, work-study programs expanded and incentives offered for colleges and universities to keep costs down.

“We once led the world in the percentage of our people with a college degree, now we are in 12th place.” Sanders said. “Countries like Germany, Denmark, Sweden and many more are providing free or inexpensive higher education for their young people. They understand how important it is to be investing in their youth. We should be doing the same,” he added.

Tuition at 4-year public colleges and universities rose by 50 percent in the United States during the past decade. As state governments have cut support for higher education, the burden has shifted to students and their parents.

With this spring’s college commencement season underway, the class of 2015 is the most indebted class in American history, according to Mark Kantrowitz, publisher of Edvisors, a website on college costs and financial aid.

Summary of Sen. Sanders’ College for All Act

Eliminate Undergraduate Tuition at 4-year Public Colleges and Universities. This legislation would provide $47 billion per year to states to eliminate undergraduate tuition and fees at public colleges and universities.

Today, total tuition at public colleges and universities amounts to about $70 billion per year. Under the College for All Act, the federal government would cover 67% of this cost, while the states would be responsible for the remaining 33% of the cost.

To qualify for federal funding, states must meet a number of requirements designed to protect students, ensure quality, and reduce ballooning costs. States will need to maintain spending on their higher education systems, on academic instruction, and on need-based financial aid. In addition, colleges and universities must reduce their reliance on low-paid adjunct faculty.

States would be able to use funding to increase academic opportunities for students, hire new faculty, and provide professional development opportunities for professors.

No funding under this program may be used to fund administrator salaries, merit-based financial aid, or the construction of non-academic buildings like stadiums and student centers.

Student Loan Reforms.
Restoration of Historically Low Student Loan Interest Rates. The College for All Act would lower student loan interest rates by restoring the formula which was in effect until 2006. Student loan interest rates would be cut almost in half for undergraduate students, dropping from 4.32% to just 2.32%. In addition, the legislation would ensure rates never rise above 8.25%.

Student Loan Re-financing.  The College for All Act would enable borrowers to refinance their loans based on the interest rates available to current students.

Work Study Reforms. Today, the federal work study program receives less than $1 billion per year, and serves nearly 700,000 students. This legislation would expand the number of students and colleges that can offer part-time employment and participate in the federal work study program, and focus funding on schools that enroll high numbers of low-income students.

Simplifying the Student Aid Application Process. The bill would create a pilot program to eliminate the requirement that students re-apply for financial aid each year, simplifying the application process and removing significant barriers faced by low-income students.

Fully Paid for by Imposing a Robin Hood Tax on Wall Street. This legislation is offset by imposing a Wall Street speculation fee on investment houses, hedge funds, and other speculators of 0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives. It has been estimated that this provision could raise hundreds of billions a year which could be used not only to make tuition free at public colleges and universities in this country, it could also be used to create millions of jobs and rebuild the middle class of this country.

Statement by Senator Bernard Sanders on the College for All Act

We have a crisis in higher education today. Too many of our young people cannot afford a college education and those who are leaving college are faced with crushing debt.

It is a national disgrace that hundreds of thousands of young Americans today do not go to college, not because they are unqualified, but because they cannot afford it. This is absolutely counter-productive to our efforts to create a strong competitive economy and a vibrant middle class. This disgrace has got to end.

In a global economy, when our young people are competing with workers from around the world, we have got to have the best educated workforce possible. And, that means that we have got to make college affordable. We have got to make sure that every qualified American in this country who wants to go to college can go to college — regardless of income.

Further, it is unacceptable that 40 million Americans are drowning in more than $1.2 trillion in student loan debt.

It is unacceptable that millions of college graduates cannot afford to buy their first home or their first new car because of the high interest rates they are paying on student debt.
It is unacceptable that, in many instances, interest rates on student loans are two to three times higher than on auto loans.

Let’s be clear: other nations around the world understand the benefits of having an educated workforce that isn’t burdened with enormous student debt. Other countries recognize that allowing all qualified students, regardless of income, to achieve a higher education is an investment in the economic prosperity of their people.

For example:

  • Last year, tuition was eliminated in Germany because policymakers believed that charging $1,300 per year was discouraging students from attending college. $1,300 per year, and that tuition was eliminated.
  • In Denmark, not only is college free of tuition and fees, people who go to college in that country actually get paid to go to college.
  • In Finland, Norway and Sweden, tuition and fees are free not only for their citizens, but in many cases, foreign students as well.
  • And, Chile, which has the highest level of income inequality in Latin America, will
    implement free college tuition next year, and pay for it by increasing taxes on
    corporations.

But, it’s not just other countries around the world that are doing the right thing. There was a time, not so many years ago, when we in the United States understood the importance of making college available to all qualified students, regardless of income.

A generation ago, our nation’s public colleges and universities were the pathways for all students, no matter their family background, to enter the middle class.

For example, the University of California system, considered by many to be the crown jewel of public higher education in this country, did not begin charging tuition until the 1980s.

In 1965, average tuition at a four-year public university was just $243, and many of the best colleges — such as the City University of New York — did not charge any tuition.

And this investment in higher education worked – the United States once led the world in the percentage of young Americans with college degrees. Sadly, today, we are in 12th place.

It is time for a fundamental change in how we approach the financing of higher education, and the legislation I will introduce today will do just that.

The College for All Act will provide free tuition at every public college and university in this country.

This means that ANY student, regardless of his or her background or income, who has the ability and desire, will be able to get the education they need and the education they deserve.  This legislation opens the door for a middle class life to millions of young Americans and will make our economy stronger and more productive.

This legislation will establish a partnership with states by developing a matching grant program which would provide $2 in federal funding for every dollar that states spend on making tuition free higher education in public colleges and universities.

This legislation would also expand the federal work study program.

This legislation not only addresses the crisis of college affordability, but it also deals with another issue of huge consequence for millions of families in this country. And, that is the incredibly oppressive burden of crushing student loan debt.

This legislation will allow every American with student debt to refinance their loans, so that borrowers will always be able to take advantage of favorable interest rates.  It makes no sense to me that Americans can refinance their homes when interest rates are low, and that somebody can purchase a car at two percent interest rates, but millions of college graduates are stuck with interest rates of 5, 6, 7 percent sometimes for decades.  That makes no sense.  That is grossly unfair.  This bill would cut student loan interest rates in half and lower the rate to about 2 percent for undergraduates.

In addition, this legislation would eliminate the obscene profit that the federal government makes through the student loan program – some $89 billion over a ten year period. The federal government should not be profiting off of student loans provided to low and moderate income families.

The truth is that providing free tuition at public colleges and universities, and reducing the burden of student debt in this country is an expensive proposition. So how are we going to pay for it?

How are we going to pay for this estimated $750 billion over the next ten years?

And, here’s the answer.  At a time of massive income and wealth inequality, at a time when trillions of dollars in wealth have left the pockets of the middle class and have gone to the top one-tenth of one percent, at a time when the wealthiest people in this country have made huge amounts of money from risky derivative transactions and the soaring value of the stock market, this legislation would impose a Wall Street speculation fee on Wall Street investment houses and hedge funds.

More than 1,000 economists have endorsed a tax on Wall Street speculation and today some 40 countries throughout the world have imposed a financial transactions tax including Britain, Germany, France, Switzerland, China, India, South Korea, Hong Kong, Singapore, Taiwan, and Brazil.

My legislation would impose a Wall Street speculation fee of 0.5 percent on stock trades (that’s 50 cents for every $100 worth of stock), a 0.1 percent fee on bonds, and a 0.005 percent fee on derivatives.

It has been estimated that this legislation would raise up to $300 billion a year.
We must revolutionize our nation’s higher education system. We must invest in the young people today, because they are our nation’s future doctors, teachers, engineers, scientists and senators – so they can ensure our economy and our nation as a whole have an edge in the 21st Century.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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